Maruti Suzuki Quarterly Profit Surges on Minivan Demand, Yen

By Siddharth Philip -
Apr 26, 2013

Maruti Suzuki India Ltd. (MSIL), the
nation’s biggest carmaker by volume, reported profit that almost
doubled because of a weaker Japanese yen and higher demand for
its Ertiga minivans and revamped Swift DZire. The shares rose.

Net income at Suzuki Motor Corp. (7269)’s Indian unit rose to 12.4
billion rupees ($228 million) in the three months ended March
from 6.4 billion rupees, the New Delhi-based company said in a
statement today. The earnings include the results of unit Suzuki
Powertrain India Ltd. which was absorbed in the fiscal year,
Maruti said.

The carmaker has benefited from the yen’s decline which
makes auto components it imports from Japan cheaper. Maruti has
seen demand for its more expensive models soar even as its total
deliveries dropped 4.6 percent in the quarter to 343,709
vehicles.

“Maruti’s margins should rise with the increasing share of
more expensive products like Swift and DZire, as well as the
declining yen,” said Basudeb Banerjee, an analyst at Quant
Broking Pvt. in Mumbai. “Volumes may not breakout but with the
declining yen and better product mix, the margins should get
better.”

Shares Rise

Shares of Maruti rose as much as 5.2 percent, headed for
their highest price since September 2009. They traded at
1,665.50 rupees, or up 4.7 percent, as of 1:25 p.m. in Mumbai.

Excluding the profit from Suzuki Powertrain, Maruti posted
a net income of 11.5 billion rupees. That exceeded the 7.05
billion-rupee median of 40 analysts’ estimates compiled by
Bloomberg.

Raw material costs declined 7.3 percent to 82.3 billion
rupees in the quarter, the company said. Revenue other than from
operations rose 34 percent to 3.9 billion rupees.

Maruti’s domestic deliveries in the year ended March 31
gained 4.4 percent to 1.05 million units while industrywide car
sales declined 6.7 percent, the first time in a decade, as
slowing economic growth and high interest rates kept buyers from
showrooms.

The yen declined 9.1 percent in the quarter versus the
rupee, according to data compiled by Bloomberg. The dollar fell
1.3 percent against the rupee, while the euro dropped 4.1
percent in the period, the data shows.